Forfeiture of shares

Forfeiture of shares

1. Accounting for forfeiture of shares Harshit Garg Assistant Professor IBM (UG) BCCC0012: Company Accounts and Practices 1

2. Forfeiture of Shares: Forfeiture of shares means the cancellation of allotment to defaulting shareholders (who has fail to pay one or more instalment ) and to treat the amount already received on such shares as forfeited. Their share will be forfeit, which means that the shareholder’s share will be cancelled. All the entries associated with the forfeited stocks, apart from those associated with premium, already mentioned in the accounting records must have conversed. The share capital account  is debited with the amount called-up. BCCC0012: Company Accounts and Practices 2

3. Journal entry for forfeiture of shares issued at Par  Date Particular Amount (Dr.) Credit (Cr.) Share Capital A / c  ( Called up amount ) Dr XYZ To Share Forfeiture A / c  ( Paid-up amount ) Cr XYZ To Share Allotment A / c Cr XYZ To Share Calls A / c  ( individually ) Cr XYZ BCCC0012: Company Accounts and Practices 3

4. Forfeiture of Shares issued at Premium This situation has two possibilities 1.  Securities Premium amount has been received 2. Securities Premium amount has not been received BCCC0012: Company Accounts and Practices 4

5. 1. Securities Premium amount has been received Date Particular Amount( Dr . ) Credit (Cr.) Share Capital A/c Dr. XYZ To Share Allotment A/c Cr. XYZ To Share Forfeited A/c Cr. XYZ To First Calls A/c Cr. XYZ BCCC0012: Company Accounts and Practices 5

6. 2. Securities Premium amount has not been received  Date Particular Amount (Dr.) Credit (Cr.) Share Capital A / c Dr . XYZ Security Premium A / c Dr. XYZ To Share Allotment A / c Cr. XYZ To Share Forfeitured A / c Cr. XYZ To First Call A/c Cr. XYZ BCCC0012: Company Accounts and Practices 6

7. Reissue of Forfeited Shares BCCC0012: Company Accounts and Practices 7

8. Question X, a shareholder, holding 100 shares of Rs 10 each has paid application money of Rs 2 per share and allotment money of Rs 3 per share, but has failed to pay the first call of Rs 2 per share and second call of Rs 3 per share. His shares were forfeited . Make the journal entry to record the forfeiture of shares. BCCC0012: Company Accounts and Practices 8

9. Journal entries Share capital A/c Dr 1000 ( 100 shares X 10 Each) To Share Forfeited A/c 500 ( 100 share X 2+3) To Share I st call 200 ( 100 share X 2) To share 2 nd & final call 300 ( 100 shares X 3) ( Being 100 shares of Ram @ Rs. 10 forfeited) BCCC0012: Company Accounts and Practices 9

10. Practice Question Mohan , a shareholder, holding 500 shares of Rs 10 each has paid application money of Rs 3 per share and allotment money of Rs 3 per share, but has failed to pay the first call of Rs 2 per share and second call of Rs 2 per share. His shares were forfeited. Make the journal entry to record the forfeiture of shares. BCCC0012: Company Accounts and Practices 10

11. Question Alpha Ltd. issued 10000 shares of Rs 100 each payable as: Rs 25 on application. Rs 25 on allotment Rs 20 on First call and Rs 30 on second and final call. 9000 shares were applied for and allotted. All the payments were received with the exception of allotment money, first call and second and final call money on 300 shares allotted to Ganesh. The Board of Directors decided to forfeit these shares. Make journal entry to record transaction relating to forfeiture of shares BCCC0012: Company Accounts and Practices 11

12. Ans Share capital A/c Dr 30000 ( 300 shares X 100 Each) To Share Forfeited A/c 7500 ( 300 share X 25) To share allotment A/c 7500 (300 shares X 25) To Share First call A/c 6000 ( 300 share X 20) To share Second and & final call A/c 9000 ( 300 shares X 30) ( Being 300 shares of Ganesh @ Rs. 100 forfeited) BCCC0012: Company Accounts and Practices 12

13. Practice Question Karma Ltd. issued 17800 shares of Rs 10 each payable as: Rs 2 on application. Rs 4 on allotment Rs 2 on First call and Rs 3 on second and final call. 17000 shares were applied for and allotted. All the payments were received with the exception of allotment money, first call and second and final call money on 1520 shares allotted to Ganesh. The Board of Directors decided to forfeit these shares. Make journal entry to record transaction relating to forfeiture of shares BCCC0012: Company Accounts and Practices 13

14. Question ABC Software Ltd. issued Rs 500000 capital divided into equity shares of Rs 10 each. The shares were issued at a premium of Rs 4 per share and were payable as : Rs 3 per share on application , Rs 7 (including premium) per share on allotment and the balance on call. All the shares applied for and were duly allotted. All the money was duly received except on 500 shares on which the call money was not received. Company decided to forfeit these shares. Make journal entry to record the forfeiture of 500 shares. BCCC0012: Company Accounts and Practices 14

15. Journal entries Share capital A/c Dr 50000 (500X 10) To Share Forfeited A/c 3000 (500 X 6) To Share First & final call A/c 2000 (500 X 4) ( Being 500 shares @ Rs. 10 are forfeited) BCCC0012: Company Accounts and Practices 15

16. Practice Question Infinix Ltd. issued Rs 600000 capital divided into equity shares of Rs 10 each. The shares were issued at a premium of Rs 5 per share and were payable as : Rs 4 per share on application, Rs 9(including premium) per share on allotment and the balance on call. All the shares applied for and were duly allotted. All the money was duly received except on 800 shares on which the call money was not received. Company decided to forfeit these shares. Make journal entry to record the forfeiture of 800 shares. BCCC0012: Company Accounts and Practices 16

17. 11. Naman Ltd issued 20,000 shares of ₹ 100 each, payable ₹ 25 on application, ₹ 30 on allotment, ₹ 25 on first call and the balance on final call. All money duly received except Anubha , who holding 200 shares did not pay allotment and calls money and Kumkum , who holding 100 shares did not pay both the calls. The directors forfeited shares of Anubha and Kumkum . Give journal entries. BCCC0012: Company Accounts and Practices 17

18. JOURNAL ENTRIES in the books of naman Ltd Bank A/c (20000 X 25) Dr 500000 To Share Application A/c 500000 Share Application A/c 500000 To share capital 500000 Share Allotment (20000x30) 600000 To Share Capital 600000 Bank A/c (600000-200x30) 594000 To share allotment 594000 Share 1 call A/c (20000 X 25) 500000 TO Share capital 500000 Bank A/c (500000-(200+100 x25)) 492500 To share 1 call 492500 Share 2 ND Final call A/c (20000 X20) 400000 To share capital 400000 Bank a/c Dr(400000-300x20) 394000 to share 2nd & final call 394000 Share Capital A/c Dr 30000 (300 x 100) To share allotment (200 x30) 6000 To share 1 st call (300x25) 7500 To share 2nd call (300x20) 6000 To share forfeiture 10500 (200 x25)+(100x25+30) ( being shares of kumkum and abha are forfeited) OR Share Capital A/c (200 X100) 20000 To share forfeited A/c (200X25) 5000 TO Share allotment (200x30) 6000 To share 1 call (200*25) 5000 To share 2 nd final call (200x20) 4000 ( being shares of Anubha is forfeited) Share Capital A/c (100 X100) 10000 To share forfeited A/c (100 x25+30) 5500 To share 1 call (100*25) 2500 To share 2 nd final call (100x20) 2000 ( being shares of kumkum is forfeited) BCCC0012: Company Accounts and Practices 18

19. Problem 2:  Forfeited Partial Called Up Capital X Ltd forfeited 200 equity shares of Rs . 10 each, Rs . 8 called-up for non-payment of first call money @ Rs . 2 each. Applications money @ Rs . 2 per share and Allotment money @ Rs . 4 per share have already been received by company. Give Journal entries for the forfeiture. BCCC0012: Company Accounts and Practices 19

20. BCCC0012: Company Accounts and Practices 20

21. Question The L & T Company Ltd. offered to public for subscription of 50,000 shares of Rs . 20 each at a premium of Rs . 5 per share. The amount was payable as under: On application Rs . 5 per share On allotment Rs . 12 per share (Including premium of Rs 5 per share) On first call Rs . 4 per share On Second and Final call Rs . 4 per share Applications were received for all the shares. Allotment was made to all the applicants in full. Mr .A failed to pay allotment and call money on 200 shares held by him . Mr.B was allotted 300 shares . He did not pay the call money. Their shares were forfeited . Make necessary journal entry for the forfeiture only. BCCC0012: Company Accounts and Practices 21

22. Share capital A/c (200 x 20) Dr 4000 Security Premium A/c (200X5) Dr 1000 To Share Forfeited A/c 1000 (200*5) To share allotment A/c 2400 (200 X 12(7+5) To Share First call A/c 800 (200*4) To share Second and & final call A/c 800 (200 X 4) (Forfeiture of 200 shares due to non payment of allotment and call money) Share capital A/c Dr 6000 (300 X 20) To Share Forfeited A/c 3600 (300 X 5+7) To Share First call A/c 1200 (300 X 4) To share Second and & final call A/c 1200 (300 X 4) (Forfeiture of 300 shares due to non payment of call money) BCCC0012: Company Accounts and Practices 22

23. Practice Question Shivam Ltd. offered to public for subscription of 1,00,000 shares of Rs . 10 each at a premium of Rs . 2 per share. The amount was payable as under: On application Rs . 2 per share On allotment Rs . 5 per share (Including premium of Rs 2 per share) On first call Rs . 2 per share On Second and Final call Rs . 3 per share Applications were received for all the shares. Allotment was made to all the applicants in full . Rohan failed to pay allotment and call money on 50 shares held by him. Sohan was allotted 85 share, He did not pay the call money. Their shares were forfeited. Make necessary journal entry for the forfeiture only. BCCC0012: Company Accounts and Practices 23

24. Question Jai Company Ltd. forfeited 200 shares of Rs 10 each, Paid up on which Rs . 7 have been received and final call of Rs . 3 per share remains unpaid. These shares were later on reissued for Rs . 8 per share fully paid up . Make journal entry for recording the forfeiture and reissue of shares . BCCC0012: Company Accounts and Practices 24

25. Share capital A/c (200X10) Dr 2000 To Share Forfeited A/c (200 X 7) 1400 To share final call A/c(200 X3) 600 (Forfeiture of 200 shares due to non payment of call money) Bank A/c (200 X8) Dr 1600 Share forfited A/c (200 x 2) Dr 400 To Share Capital (200X 10) 2000 ( Reissue of forfited Shares ) Share forfeited A/c (1400-400) Dr 1000 To Capital Reserve A/c 1000 ( Being share forfiture Amount transferred to capital reserve A/c BCCC0012: Company Accounts and Practices 25

26. Practice Question Mohan Ltd . forfeited 750 shares of Rs 10 each, fully called up on which Rs . 6 have been received and final call of Rs . 4 per share remains unpaid. These shares were later on reissued for Rs . 7 per share fully paid up. Make journal entry for recording the forfeiture and reissue of shares. BCCC0012: Company Accounts and Practices 26

27. Journal entry in the books of Mohan ltd Share Capital A/c (750x10) 7500 To Share forfeited A/c (750x6) 4500 To Share 2 nd & Final call a/c (750x4) 3000 ( being om 750 shares@10 are called but shares are forfeited due to non payment of call money) Bank A/c (750x7 ) Dr 5250 Share Forfeied A/c (750x3) Dr. 2250 To share Capital (750x10) 7500 (being reissue of forfeited shares) Share forfeited a/ dr (4500-2250) 2250 to capital reserve 2250 ( being amount of share forfeited into capital reserve) BCCC0012: Company Accounts and Practices 27

28. Question .Record the journal entries for forfeiture and re-issue of shares in the following cases (i) X Ltd forfeited 20 shares of Rs 10 each,Rs 7 called up on which the shareholder had paid application and allotment money of Rs 5 per share. Out of these, 15 shares were re-issued to Naresh as Rs 7 per share paid up for Rs 8 per share. BCCC0012: Company Accounts and Practices 28

29. Journal entries in the books of X ltd. Share Capital A/c(20x7) Dr 140 To share forfeited a/c 100 To Share Call a/c 40 ( Being 20 Shares Forfeited) Bank A/c (15x8) Dr 120 To share Capital (15x7) 105 To security premium (15x1) 15 ( Being forfeited shares are reissued) Share forfeited A/c Dr 75 To Capital Reserve 75 (15/20x100) ( Being share forfeited account transferred to capital reserve ac) BCCC0012: Company Accounts and Practices 29

30. Amount to be transferred into Capital Reserve Share Forfeited amount for forfeited shares(100x15/20) 75 Less- Amount utilised for re-issue Amount transfferd for capital reserve 75 BCCC0012: Company Accounts and Practices 30

31. Practice Question Pass the journal entries for forfeiture and re-issue of shares in the following cases (i) Tata Ltd forfeited 100 shares of Rs 10 each,Rs 8 called up on which the shareholder had paid application Rs 3 and allotment of Rs 2 per share. Out of these, 60 shares were re-issued to Naresh as Rs 9 per share paid up for Rs 8 per share. BCCC0012: Company Accounts and Practices 31

32. Journal entries in the books of TATA ltd. Share Capital A/c(100X8) Dr 800 To share forfeited a/c (100X5) 500 To Share Call a/c (100X3) 300 ( Being 100 Shares Forfeited) Bank A/c (60X9) Dr 540 To share Capital (60X8) 480 To security premium (60X1) 60 ( Being forfeited shares are reissued) Share forfeited A/c Dr 300 To Capital Reserve 300 (500/100X60) ( Being share forfeited account transferred to capital reserve ac) BCCC0012: Company Accounts and Practices 32

33. Amount to be transferred into Capital Reserve Share Forfeited amount for forfeited shares(500/100x60) 300 Less- Amount utilised for re-issue Amount transfferd for capital reserve 300 BCCC0012: Company Accounts and Practices 33

34. Issue and Redeemed at premium Y Ltd forfeited 90 shares of Rs 10 each, Rs 8 called up issued at a premium of Rs 2 per share to ’R’ for non-payment of allotment money of Rs 5 per share (including premium). Out of these, 80 shares were re-issued to Sanjay as Rs 8 called up for Rs 10 per share . BCCC0012: Company Accounts and Practices 34

35. Journal entries in the books of Y ltd. Share Capital A/c(90X8) Dr 720 Security Premium (90x2) 180 To share forfeited a/c (90x5) 450 To Share Allotment a/c (90x5) 450 ( Being 90 Shares Forfeited) Bank A/c (80X10) Dr 800 To share Capital (80X8) 640 To security premium (80x2) 160 ( Being forfeited shares are reissued) Share forfeited A/c Dr 400 To Capital Reserve 400 (450/90x80) ( Being share forfeited account transferred to capital reserve ac) BCCC0012: Company Accounts and Practices 35

36. Amount to be transferred into Capital Reserve Share Forfeited amount for forfeited shares(450/90x80 ) 400 Less- Amount utilised for re-issue Amount transfferd for capital reserve 400 BCCC0012: Company Accounts and Practices 36

37. Practice Question Ramson Ltd forfeited 200 shares of Rs 100 each , Rs 100 called up issued at a premium of Rs 25 per share to ’ Bablu ’ for non-payment of allotment money of Rs 50 per share (including premium ),First and final call Rs.35. Out of these, 120 shares were re-issued to Sanjay for premium as Rs 100 face value for Rs 120 per share. BCCC0012: Company Accounts and Practices 37

38. Journal entries in the books of Ramson ltd. Share Capital A/c(200x100) Dr 20000 Security Premium (200x25) 5000 To share forfeited a/c (200x40) 8000 To Share Allotment a/c (200x50) 10000 To Share First & Final call (200 x35) 7000 ( Being 90 Shares Forfeited) Bank A/c (120*120) Dr 14400 To share Capital (120x100) 12000 To security premium (120x20) 2400 ( Being forfeited shares are reissued) Share forfeited A/c Dr 4800 To Capital Reserve 4800 (8000/200*120) ( Being share forfeited account transferred to capital reserve ac) Amount to be transferred into Capital Reserve Share Forfeited amount for forfeited shares(8000/200x120) 4800 Less- Amount utilised for re-issue Amount transfferd for capital reserve 4800 BCCC0012: Company Accounts and Practices 38

39. Question 43.A Ltd was registered with an authorised capital of Rs 10,00,000 divided into equity shares of Rs 10 each. The company invited applications for the issue of 50,000 shares. Applications for 48,000 shares were received. All calls were made and were duly received except the final call of Rs 2 per share on 1,000 shares. All these shares were forfeited and later on re-issued at Rs 9,000 as fully paid. (i)Show how ‘share capital’ will appear in the balance sheet of A Ltd. as per Schedule VI, Part I of the Companies Act, 1956.  (Compartment 2014) (ii)Also prepare ‘notes to accounts’ for the sam BCCC0012: Company Accounts and Practices 39

40. A Ltd Balance Sheet (as at ………) PARTICULAR Note no Amount Equity & Liablities A. Shareholder fund a1.Share Capital 480000 a2. Reserve & Surplus 7000 Assets A. Current assets a.1 -Cash & Cash Equil. 487000 BCCC0012: Company Accounts and Practices 40

41. Notes to account W.N-1 Share Capital Authorised Share Capital 1000000 (100000 shares @ Rs. 10 ) Issued Share Capital 500000 (50000 shares @ Rs. 10 each) Subscribed Share Capital 480000 (48000 share @ Rs. 10 each) Called up and Paid up share capital 480000 (48000 share @ Rs. 10 each) Reserve and Surplus Capital Reserve Amount received on forfeited shares Less - utilised in reissue (1000x1) Transferred to security premium Cash & Cash equilvalent 487000 47000 x 10 +1000x8+9000 BCCC0012: Company Accounts and Practices 41

42. 44.Record the journal entries for forfeiture and re-issue in the following cases (i)X Ltd forfeited 200 shares of Rs 100 each, Rs 70 called up, on which the shareholders had paid application and allotment money of Rs 50 per share. Out of these, 150 shares were re-issued to Naresh as Rs 70 paid-up for Rs 80 per share. (ii)Y Ltd forfeited 180 shares of Rs 10 each, Rs 8 called-up, issued at a premium of Rs 2 per share to R for non-payment of allotment money of Rs 5 per share (including premium). Out of these, 160 shares were re-issued to Sanjay as Rs 8 called up for 110 per share fully paid-up.(All India 2013) BCCC0012: Company Accounts and Practices 42

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44. BCCC0012: Company Accounts and Practices 44

45. Give journal entries to record the following transactions of forfeiture and re-issue of shares and open share forfeiture account in the books of the respective companies.L Ltd forfeited 470 equity shares of Rs 10 each issued at premium of Rs 5 per share for non-payment of allotment money Rs 8 per share (including share premium Rs 5 per share) and the first and final call of Rs 5 per share. Out of these, 60 equity shares were subsequently re-issued @ Rs 14 per shares . BCCC0012: Company Accounts and Practices 45

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47. What amount of profit on reissue will be transferred to Capital Reserve under the following situations? Z Ltd. forfeited 800 equity shares of Rs . 10 each issued at a discount of 10% for the non-payment of first and final call of Rs . 3 per share. The forfeited shares were reissued at Rs . 12 per share as fully paid-up. 3,000 shares of Rs . 10 each of Rakesh was forfeited by crediting Rs 5,000 to Forfeited Shares Account. Out of these, 1,800 shares were reissued to Mohan for Rs . 9 per share fully paid-up. Z Ltd. forfeited 20 shares of Rs 100 each 60 called-up issued at par to Shiv on which he paid Rs . 20 per share. Out of these, 15 shares were reissued to Rajesh as Rs . 60 paid-up for Rs . 45 per share. BCCC0012: Company Accounts and Practices 47

48. Questions India infrastructure Ltd. has issued its shares of Rs . 20 each . Mahima holding 100 shares did not pay final call of Rs 5 per share. Her shares were forfeited . Later on the company reissued 100 shares of these forfeited shares at ( I) Rs . 15 per share ( II) Rs . 20 per share, and ( III) Rs . 25 per share Make journal entries for the forfeiture and reissue of the shares in the books of company. BCCC0012: Company Accounts and Practices 48

49. Journal entries in the books of India Infras . Ltd. Share Capital A/c (100 x20) Dr. 2000 To Share Forfeiture (100x15) 1500 To Share Final calls (100x5) 500 ( being 100 shares @ Rs.20 of Mahima is forfeited due to non payment of final call) CASE -1 Bank A/c (100 X 15) Dr 1500 Share forfeiture A/c (100 X 5) Dr. 500 To share capital 1500 ( being reissue of forfieted shares ) Share forfeiture A/c (1500-500) Dr 1000 To capital reserve 1000 ( being surplus of share fofeiture A/c transferred into capital reserve A/c) BCCC0012: Company Accounts and Practices 49

50. CASE -2 Bank A/c (100 X 20) Dr 2000 To share capital 2000 ( being reissue of forfieted shares ) Share forfeiture A/c Dr 2000 To capital reserve 2000 ( being surplus of share fofeiture A/c transferred into capital reserve A/c) CASE -3 Bank A/c (100 X 25) Dr 2500 To share capital 2000 To Seurity premium 500 ( being reissue of forfieted shares ) Share forfeiture A/c Dr 1500 To capital reserve 1500 ( being surplus of share fofeiture A/c transferred into capital reserve A/c) BCCC0012: Company Accounts and Practices 50

51. Practice Question Aryabharat Ltd . has issued its shares of Rs . 100 each . Shubham holding 250 shares did not pay final call of Rs 40 per share. Her shares were forfeited. Later on the company reissued 250 shares of these forfeited shares at (I) Rs . 4 per share (II) Rs . 80 per share, and (III) Rs . 120 per share Make journal entries for the forfeiture and reissue of the shares in the books of company. BCCC0012: Company Accounts and Practices 51

52. Question A Company issued for public subscription 40,000 equity shares of Rs . 10 each at a premium of Rs . 2 per share payable as under: On application Rs . 2 per share On Allotment Rs . 5 per share (including premium) On first call Rs . 2 per share On final call Rs . 3 per share Applications were received for 70,000 Shares. Allotment was made pro-rata to the applicants for 50,000 shares, the remaining applications being refused. Money overpaid on applications was applied towards sum due on allotment. A, to whom, 1,500 shares were allotted, failed to pay the allotment and call money. B, to whom 2,000 shares were allotted, failed to pay the two calls. The shares of A and B were subsequently forfeited after the second call was made. 3,000 of the forfeited shares were reissued @ Rs . 8 per share fully paid. The reissued shares included all of A’s shares. Pass journal entries in the books of the company to record the above transactions . BCCC0012: Company Accounts and Practices 52

53. Working Notes : 40,000 shares were issued to applicants for 50,000 shares Ratio of allotment is 4:5 A was allotted 1,500 shares so he applied for = 1500×5/4 = 1875 shares A paid on application 1875 × 2 = 3,750 A was allotted 1,500 shares and was to pay on application = 3,000 Surplus transferred to Share Allotment = 750 Total Amount due on allotment = 40,000 × 5 = 2,00,000 Less : Surplus adjusted from Share Application = 20,000 = Balance amount due = 1,80,000 Less: Arrears from A (Due Rs . 7,500 Less: Surplus Application amount Rs 750) = 6,750 = Amount received on allotment = 1,73,250 BCCC0012: Company Accounts and Practices 53

54. Amount due on share First Call = 40,000 × 2 = 80,000 Less: Arrears from A & B [(1,500+2,000) × 2] = 7,000 = Hence amount received = 73,000 Amount due on Second and Final Call = 40,000 × 3 = 1,20,000 Less: Arrears from A & B [(1,500+2,000) × 3] = 10,500 = Amount Received = 1,09,50 Amount Forfeited A & B = 13,750 From A = 3,750 From B (2,000×5 = 10,000 Amount forfeited on 3,000 shares = [From A Rs . 3,750And From B (10,000 ÷ 2,000) × 1,500] = 3,750+ 7,500= 11,250 Less: Discount allowed on re-issue = 6,000 = Balance transferred to Capital Reserve = 5,250 BCCC0012: Company Accounts and Practices 54

55. Bank A/c Dr (70000x2) 140000 To Share Application 140000 Share Application A/c Dr 140000 To share capital (40000x2) 80000 To Bank (20000 x2) 40000 To share Allotment (10000x2) 20000 Share Alloment A/c (40000x5) 200000 To share Capital (40000 X 3) 120000 To Security Premium (40000x2) 80000 Bank A/c (200000-20000-6750) 173250 To Share Allotment 173250 Share 1 call A/c Dr (40000x2) 80000 To share Capital 80000 Bank A/c(80000-3500x2) Dr 73000 To Share 1 call 73000 Share 2 call a/c (40000x3) Dr 120000 To share capital 120000 Bank a/c (120000-3500x3) 109500 To share 2 nd & Final call 109500 Share Capital A/c (1500+2000)x10) 35000 Security premium a/c (1500x2) 3000 To share forfeited 13750 (1875x2+2000x5) To share allotment 6750 To Share 1 call (1500+2000x2) 7000 To share 2 nd final call (3500 x3) 10500 ( being shares of a and B are forfeited) Bank A/c dr (3000*8) 24000 Share forfeited (3000 x 2) 6000 To Share capital (3000 x 10) 30000 ( being forfeited shares are reissued) Share forfeited A/c (4500+750) 5250 To capital reserve 5250 BCCC0012: Company Accounts and Practices 55

56. 12. Kishna Ltd issued 15,000 shares of ₹ 100 each at a premium of ₹ 10 per share, payable as follows: On application- ₹ 30 On allotment - ₹ 50 (including premium ) On first and final call - ₹ 30 All the shares subscribed and the company received all the money due, With the exception of the allotment and call money on 150 shares. These shares were forfeited and reissued to Neha as fully paid share of ₹ 12 each.   Give journal entries in the books of the company. BCCC0012: Company Accounts and Practices 56

57. Bank A/c Dr. 4,50,000 To Share Application A/c 4,50,000 (Share Application money received for 15,000 shares @ ₹ 30 per share) Share Application A/c Dr. 4,50,000 To Share Capital A/c 4,50,000 (Share Application money of 15,000 shares transferred to ShareCapital Account) BCCC0012: Company Accounts and Practices 57

58. Share Allotment A/c Dr. 7,50,000 To Share Capital A/c 6,00,000 To Securities Premium A/c 1,50,000 (Share Allotment money on 15,000 shares @ ₹ 50 per shareincluding ₹ 10 securities premium due) Bank A/c Dr. 7,42,500 To Share Allotment A/c 7,42,500 (Share Allotment received on 14,850 shares and 150 sharesfailed to pay the money due) Share First and Final Call A/c Dr. 4,50,000 To Share Capital A/c 4,50,000 (Share First and Final Call for 15,000 shares @ ₹ 30 per share due) Bank A/c Dr. 4,45,500 To Share First and Final Call A/c 4,45,500 (Share First and Final Call received for 14,850 shares @ ₹ 30 per share and 150 shares failed to pay amount due) Share Capital A/c (150×100) Dr. 15,000 Share Premium A/c (150×10) Dr. 1,500 To Share Allotment A/c (150×50) 7,500 To Share First and Final Call A/c (150×30) 4,500 To Share Forfeiture A/c (150×30) 4,500 (150 shares forfeited for non-payment of Share Allotment and ShareFirst and Final Call  ) Bank A/c Dr. 18,000 To  Share Capital A/c 15,000 To Securities Premium A/c 3,000 (150 shares of ₹ 100 each reissued @ ₹ 120 to Neha) Share Forfeiture A/c Dr. 4,500 To Capital Reserve A/c 4,500 (Balance of Share Forfeiture Account transferred to Capital ReserveAccount ) BCCC0012: Company Accounts and Practices 58

59. 1. Share allotment Account is a) Personal b) Real c) Nominal d) Real and nominal BCCC0012: Company Accounts and Practices 59

60. 2. The allotment of shares in case of oversubscription is called…. A. Pro‐rata allotment B. Private Placement C. Offer for sale D. None of these BCCC0012: Company Accounts and Practices 60

61. 3. Call-in-arrear is shown a) Under the head current liabilities b) By deducting from the called up capital c) Under the head current assets d) deducting from paid up capital BCCC0012: Company Accounts and Practices 61

62. 4. Security premium account can be utilized for …………. A. Issuing fully paid bonus shares B. Write off preliminary expenses C. Write off underwriting commission D. All of these BCCC0012: Company Accounts and Practices 62

63. 5. Dividend is usually paid on a) Called-up-capital b) Nominal capital c) Paid-up-capital d) Uncalled capital BCCC0012: Company Accounts and Practices 63

64. 6.Authorized capital is called as………… A. Reserve capital B. Nominal Capital C. Capital Reserve D. Subscribed capital BCCC0012: Company Accounts and Practices 64

65. 7. A Company issued 50,000 shares of ₹20 each at 5% premium. ₹10 were payable on application and balance on allotment. What will be the allotment amount? (A) ₹5,00,000 (B) ₹4,75,000 (C) ₹5,50,000 (D) ₹5,25,000 BCCC0012: Company Accounts and Practices 65

66. 63. Following amounts were payable on issue of shares by a Company : ₹3 on application, ₹3 on allotment. ₹2 on lirst call and ₹2 on final call. X holding 500 shares paid only application and allotment money whereas Y holding 400 shares did not pay final call. Amount of calls in arrear will be : (A) ₹3,800 (B) ₹2,800 (C) ₹1,800 (D) ₹6,200 BCCC0012: Company Accounts and Practices 66

67. 64. The subscribed capital of a company is ?80,00,000 and the nominal value of the share is ? 100 each. There were no calls in arrear till the final call was made. The final call made was paid on,77,500 shares only. The balance in the calls in arrear amounted to ?62,500. Calculate the final call on share. (A) ₹7 (B) ₹20 (C) ₹22 (D) ₹25 BCCC0012: Company Accounts and Practices 67

68. 65. A shareholder holding 600 shares paid the amount of call @ ₹5 per share on 1st November 2018 whereas the call was due on 1st March 2019. Interest on calls in advance as per Table F will be : (A) ₹45 (B) ₹60 (C) ₹50 (D) ₹120 BCCC0012: Company Accounts and Practices 68

69. 69. A Company invited applications for 1,00,000 shares and it received applications for 1,50,000 shares. Applications for 30,000 shares were rejected and the remaining were allotted shares on prorata basis. How many shares an applicant for 3,000 shares will be allotted : (A) 2,500 Shares (B) 3,600 Shares (C) 4,500 Shares (D) 2,000 Shares BCCC0012: Company Accounts and Practices 69

70. 70. E Ltd. had allotted 10,000 shares to the applicants of 14,000 shares on pro-rata basis. The amount payable on application was ₹2. F applied for 420 shares. The number of shares allotted and the amount carried forward for adjustment against allotment money due from F will be : (C.F. Foundation, June 2013) (A) 60 shares; ₹120 (B) 340 shares; ₹160 (C) 320 shares, ₹200 (D) 300 shares; ₹240 BCCC0012: Company Accounts and Practices 70

71. 71. If applicants for 80,000 shares were allotted 60,000 shares on prorata basis, the shareholder who was allotted 1,200 shares must have applied for : (A) 900 Shares (B) 3,600 Shares (C) 1,600 Shares (D) 4,800 Shares BCCC0012: Company Accounts and Practices 71

72. 72. A Company offered 50,000 shares of ?10 each at par payable as to ?3 on applications, ?5 on allotment and the balance on final call. Applications were received for 60,000 shares and the allotment was made pro-rata. The excess application money was to be adjusted on allotment and call. How much amount will be transferred from Share Application A/c to Share Allotment A/c? (A) ₹1,80,000 (B) ₹30,000 (C) ₹1,50,000 (D) ₹50,000 BCCC0012: Company Accounts and Practices 72

73. 73. A company issued 4,000 equity shares of ₹10 each at par payable as under : On application ₹3; on allotment ₹2; on first call ₹4 and on final call ₹1 per share. Applications were received for 13,000 shares. Applications for 3,000 shares were rejected and pro-rata allotment was made to the applicants for 10,000 shares. How much amount will be received in cash on first call? Excess application money is adjusted towards amount due on allotment and calls. (A) ₹6,000 (B) Nil (C) ₹16,000 (D) ₹10,000 BCCC0012: Company Accounts and Practices 73

74. 74. A company issued 4,000 equity shares of ₹10 each at par payable as under : On application ₹3; on allotment ₹2; on first call ₹4 and on final call ?1 per share. Applications were received for 10,000 shares. Allotment was made pro-rata. How much amount will be received in cash on allotment? (A) ₹8,000 (B) ₹12,000 (C) Nil (D) None BCCC0012: Company Accounts and Practices 74

75. 75. A company issued 5.000 equity shares of ₹100 each at par payable as to : ₹40 on application; ?50 on allotment and ₹10 on call. Applications were received for 8,000 shares. Allotment was made on pro-rata. How much amount will be received in cash on allotment? (A) ₹2,50,000 (B) ₹1,20,000 (C) ₹1,30,000 (D) ₹50,000 BCCC0012: Company Accounts and Practices 75

76. 77. A Company purchased a Building for ₹12,00,000 out of which ₹2,00,000 were paid in cash. Balance amount was paid by issue of equity shares of ₹10 each at 25% premium. How many shares will be issued by the Company : (A) 1,00,000 Shares (B) 80,000 Shares (C) 1,20,000 Shares (D) 96,000 Shares BCCC0012: Company Accounts and Practices 76

77. 78. If shares of ₹4,00,000 are issued for purchase of assets of ₹5,00,000, ₹1,00,000 will be treated as ……………………. : (A) Discount (B) Premium (C) Profit (D) Loss BCCC0012: Company Accounts and Practices 77

78. MCQ on Forfeiture 81. Forfeiture of shares results in the reduction of: (A) Subscribed Capital (B) Authorised Capital (C) Reserve Capital (D) Fixed Assets BCCC0012: Company Accounts and Practices 78

79. 82. Which one of the following items is not a part of subscribed capital? (A) Equity Shares (B) Preference Shares (C) Forfeited Shares (D) Bonus Shares BCCC0012: Company Accounts and Practices 79

80. 83. At the time of forfeiture of shares the share capital account is debited with (A) Face value (B) Called up value (C) Paid up value (D) Issued value BCCC0012: Company Accounts and Practices 80

81. 84. Voluntary return of shares for cancellation by the shareholders is called (A) Cancellation of shares (B) Forfeiture (C) Surrender of shares (D) None of these BCCC0012: Company Accounts and Practices 81

82. 85. If the Premium on the forfeited shares has already been received, then Securities Premium A/c should be : (A) Credited (B) Debited (C) No treatment (D) None of these BCCC0012: Company Accounts and Practices 82

83. 86. Balance of share forfeiture account is shown in the balance sheet under the head …………… (A) Share Capital Account (B) Reserve and Surplus (C) Current Liabilities and Provisions (D) Unsecured Loans BCCC0012: Company Accounts and Practices 83

84. 87. On an equity share of ₹10 the company has called up ₹8 but ₹6 have been received by the company is forfeited, the capital account should be debited by: (A) ₹10 (B) ₹8 (C) ₹6 (D) ₹2 BCCC0012: Company Accounts and Practices 84

85. 88. If a share of ₹10 issued at a premium of ₹3 on which the full amount has been called and ₹8 (including premium) paid is forfeited the capital account should be debited with: (A) ₹5 (B) ₹8 (C) ₹10 (D) ₹13 BCCC0012: Company Accounts and Practices 85

86. 89. If a share of ₹10 issued at a premium of n on which ₹9 (including premium) have been called and ₹7 including premium is paid is forfeited, the capital account should be debited by : (A) ₹10 (B) ₹7 (C) ₹8 (D) ₹9 BCCC0012: Company Accounts and Practices 86

87. 90. 600 shares of ₹10 each were forfeited for non-payment of ₹2 per share on first call and ₹5 per share on final call. Share Forfeiture Account will be credited with: (A) ₹1,200 (B) ₹1,800 (C) ₹3,000 (D) ₹4,200 BCCC0012: Company Accounts and Practices 87

88. 91. 800 shares of ₹10 each issued at 20% premium were forfeited for non-payment of allotment money of ₹5 (including premium) and first & final of 3 per share. Share Forfeiture Account will be credited with : (A) ₹1,600 (B) ₹2,400 (C) ₹3,200 (D) ₹4,800 BCCC0012: Company Accounts and Practices 88

89. 92. 800 shares of ₹10 each issued at 30% premium (to be paid on allotment) were forfeited for non-payment of ₹2 per share on first call and 2 per share on final call. Share Forfeiture Account will be credited with : (A) ₹2,400 (B) ₹4,800 (C) ₹3,200 (D) ₹7,200 BCCC0012: Company Accounts and Practices 89

90. 93. A Company forfeited 300 shares of ₹10 each, ₹8 per share called up, on which A had paid application and allotment money of ₹6 per share. Share Forfeiture Account will be credited with : (A) ₹600 (B) ₹1,800 (C) ₹1,200 (D) ₹2,400 BCCC0012: Company Accounts and Practices 90

91. 94. On 300 equity shares of ₹10 the company has called up ₹8 but ₹6 have been received by the company are forfeited, the forfeiture account should be credited by : (A) ₹2,400 (B) ₹1,200 (C) ₹1,800 (D) ₹600 BCCC0012: Company Accounts and Practices 91

92. b 95. If 400 shares of ₹10 issued at a premium of ₹3 on which the full amount has been called and ₹8 (including premium) have been received are forfeited, the forfeiture account should be credited with : (A) ₹3,200 (B) ₹2,000 (C) ₹1,200 (D) ₹2,800 BCCC0012: Company Accounts and Practices 92

93. 96. If 500 shares of ₹10 issued at a premium of ₹1 on which ₹9 (including premium) have been called and ₹7 including premium have been paid are forfeited, the forfeiture account should be credited by : (A) ₹3,000 (B) ₹3,500 (C) ₹4,000 (D) ₹4,500 BCCC0012: Company Accounts and Practices 93

94. 97. A Company forfeited the following shares : 200 shares of ₹10 each; called up ₹9 per share, paid-up ₹7 per share. Journal Entry for forfeiture will be) : BCCC0012: Company Accounts and Practices 94

95. 98. X Ltd. forfeited 500 shares of ₹10 each, ₹7 called up, issued at a premium of ₹2 per share to be paid at the time of allotment for non-payment of first call of X2 per share. Entry on forfeiture will be : BCCC0012: Company Accounts and Practices 95

96. 99. The amount of discount on reissue of forfeited shares cannot exceed : ( CPTDec ., 2012) (A) 5% of the face value (B) 10% of the face value (C) The amount received on forfeited shares (D) The amount not received on forfeited shares BCCC0012: Company Accounts and Practices 96

97. 100. Discount allowed on re-issue of forfeited shares is debited to : (A) Share Capital A/c (B) Share forfeiture A/c (C) Statement of Profit & Loss (D) General Reserve A/c BCCC0012: Company Accounts and Practices 97

98. 101. The balance of the forfeited shares account after re-issue of forfeited shares is transferred to : (A) Statement of Profit & Loss (B) Share Capital A/c (C) Capital Reserve A/c (D) General Reserve A/c BCCC0012: Company Accounts and Practices 98